Investors in the Australian share market may have reason to expect higher returns than the historical average of approximately 10% per annum. Analysts at Morgans have identified specific ASX 200 shares that they believe could yield returns between 18% and 27% over the next year.
Elders Ltd: Positive Outlook Following Acquisition Approval
One of the highlighted shares is Elders Ltd (ASX: ELD). Morgans expressed optimism following the Australian Competition and Consumer Commission’s (ACCC) approval of Elders’ acquisition of Delta Agribusiness. Although Morgans was slightly disappointed by Elders’ recent trading update, it sees potential for improved performance in FY 2026.
The ACCC’s approval includes conditions for six store divestments, which Morgans described as “not material to earnings.” Elders has provided guidance for FY25, indicating results that were 9.3% below forecasts at the mid-point. The broker noted that the expected improvement in seasonal conditions did not materialize until the fourth quarter.
Morgans anticipates that FY26 will benefit from favorable rainfall forecasts, rising selling prices, and ongoing transformation projects. The firm has maintained a BUY recommendation, setting a new price target of A$8.50. With the current share price at A$7.53, this suggests a potential upside of 13%. Additionally, investors can expect a 4.8% dividend yield, raising the total potential return to approximately 18%.
Guzman Y Gomez: Growth Potential in the Quick Service Sector
Another strong contender is Guzman Y Gomez Ltd (ASX: GYG), a quick-service restaurant operator. Morgans has retained a buy rating for GYG, citing a quarterly update that met market expectations. While GYG’s current sales growth is trailing behind market estimates, Morgans believes that new menu offerings will stimulate stronger growth as the financial year progresses.
The broker noted that the first quarter of FY26 unfolded largely as anticipated, with comparable sales growth improving slightly. GYG is expected to see comp sales growth rise, driven by the introduction of items like the Caesar and a more favorable comparison to previous periods. Morgans forecasts a comp sales growth of 6.0% in the second quarter, indicating that the first quarter may represent the lowest point for growth this year.
Morgans has increased its price target for GYG to A$32.60. Based on the current share price of A$25.69, this suggests a potential upside of 27% for investors over the next twelve months.
As investors weigh their options, the insights from Morgans underscore the potential for significant returns in the Australian share market, challenging the traditional expectations of modest annual growth.
This article serves as general investment advice and reflects the views of Morgans and its analysts, who have specific recommendations based on their analyses. As always, investors should conduct thorough research before making financial decisions.
